How Tiny Startups Like Hello and 800Razors Are Stealing Share From CPG Giants

Craig Dubitsky may represent big packaged-goods companies’ worst nightmare, but there’s a good chance they may not have even noticed him. He’s a small part of a big movement — an insurgent group of digitally enabled entrepreneurs gnawing away at the dominance of multibillion-dollar brands and their giant marketing budgets.

The former commodity trader has been nosing around their turf for over a decade. Mr. Dubitsky, age 47, became a board member and adviser to Method, maker of green cleaning products, when its founders were still working out of their apartment in 2001. Later he co-founded lip-balm marketer Eos (Evolution of Smooth); joined the board of alternative over-the-counter drug marketer Help Remedies; served as chief marketer of snack startup Popcorn Indiana; and most recently founded Hello oral-care products.

Individually, none of those brands pose an existential threat to the behemoths of packaged goods. Collectively, they and many more like them are having a big impact. Small and midsize firms took 1.6 share points, or nearly $10 billion in sales, from the packaged-goods behemoths over three post-recession years from 2009 to 2012, according to a report from IRI and Boston Consulting Group. The smaller the players, the bigger the impact: Companies with sales of less than $100 million gained the most and the share shift accelerated over time (see chart).